KEY POINTS:
The New Zealand dollar rose against all major currencies today as investors flocked to its high return.
Bank of New Zealand currency strategist Danica Hampton said the US dollar had started the offshore session on a firmer footing, buoyed by talk a US hedge fund was in trouble and being forced to buy back the greenback.
The kiwi had touched a low of US73.70c yesterday evening but that weakness proved shortlived. It closed on US74.14c against US73.82c at yesterday's close.
Real-money demand for the NZ dollar ahead of the end of the month and active buying from US model accounts saw the kiwi erase its earlier losses against the US dollar, Ms Hampton said.
Softer than expected US data on inflation and Midwest business activity gave the kiwi another boost and it extended its gains, topping US74.30c.
Against the Australian dollar, the kiwi picked up from overnight weakness. It closed on A89.50c compared with A89.30c yesterday.
Soft Australian manufacturing industry put downward pressure on the aussie.
The Australian Industry Group-PricewaterhouseCoopers Australian Performance of Manufacturing Index (PMI) fell 0.7 points to 51.7 index points in April.
Australia's central bank is widely expected to keep rates steady on Wednesday, while markets are still pricing in a little less than 50 per cent chance of a 25-basis-point rate rise to 6.5 per cent over the next 12 months.
Against the euro, the kiwi firmed a little to 0.5432 from 0.5414 yesterday evening, while against the yen it rose to 88.65 from 88.25. The trade weighted index rose to 71.74 from 71.50.
The US dollar stayed near a record low against the euro after data the previous day supported expectations that the Federal Reserve will cut interest rates later this year.
Activity in Asia was light as most financial markets in the region outside Japan were closed for national holidays on Tuesday. Many markets in Europe are also shut on Tuesday.
Reuters currency rates:
5pm today 5pm yesterday
NZ dlr/US dlr US74.14c US73.82c
NZ dlr/Aust dlr A89.50c A89.30c
NZ dlr/euro 0.5432 0.5414
NZ dlr/yen 88.65 88.25
NZ dlr/stg 37.07p 37.01p
NZ TWI 71.74 71.50
Australian dollar US82.84c US82.66c
Euro/US dollar 1.3651 1.3636
US dollar/yen 119.56 119.54
- NZPA W